Contents. 2 Introduction 5 Master Checklist 6 Mortgage Preapproval 12 Hire A Realtor 17 Find Your Home. 27 Making An Offer

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2 Contents 2 Introduction 5 Master Checklist 6 Mortgage Preapproval 12 Hire A Realtor 17 Find Your Home 27 Making An Offer 30 Escrow Period Inspection Appraisal Insurance Finalize Mortgage 36 Closing 39 Monthly Mortgage Payment Page 2 1

3 B Introduction uying a home represents stability, safety, and an investment in the future. Your decision to buy a house is exciting and it s the beginning of an epic adventure. But like so many things, the process can be full of hurdles and the potential for being led astray. You ll likely work with 8 to 10 different businesses through this process, and being able to understand and chose wisely is key. Using this workbook is one reason you should feel confident, you re going to nail the home buying process. We created this guide because, as insurance agents, we see so many people struggle with the home buying process. They re often confused, and sometimes even taken advantage of. We ve helped so many of our clients have peace of mind every step of the way. Laying it out for others in a simple step by step system seemed like a logical next step. Page 3 2

4 Introduction Here s the struggle. There are a LOT of small steps in the buying process. Most people worry through it without really knowing what s coming next. This creates fear, confusion, and all kinds of missteps. They may still succeed in buying a house, but they ll spend more money and lose more sleep. You won t have that struggle You ll have hurdles & curveballs of course, but you have the one thing that other folks don t: a game plan. This guide is like a Sherpa for climbing Mt Everest or a caddie at Augusta National golf course. It won t do the work for you but it will make sure you know each step that s coming. If you follow the steps & use the workbook, you ll enjoy the process and always be ready for the next thing. Congratulations! Be proud of yourself for taking charge of the home buying experience. Page 4 3

5 How to Use this Guide The pages that follow are organized to reflect the general flow of your home buying process. Many steps will be happening at the same time during your real life experience, and they may not follow your guide exactly. The Master Checklist on page 5 will help hold it all together. Check off steps as you complete them and refer to the topic sections if you don t understand why something is on the checklist. Topic Sections offer details on each step. They also include simple checklists and organizers to make sure you have answers on that topic. Page 5 4

6 How to Use this Guide COMBINE IT WITH THE COURSE This workbook was created in tandem with the New Home Buyers Guide Course The course includes: In-depth explanation videos for all 9 steps Expert interviews for all 9 steps Access to a community of support in our closed Facebook group If you don t already have access, go to Use the discount code paidworkbook to save $12.95 at checkout Page 6 5

7 Master Checklist Check Credit & Save Down Payment Get Mortgage Preapproval Hire Realtor Find Your Home Make Offer with Contingencies Celebrate Accepted Offer! Tell Mortgage Lender Go Time Get Insurance Quote Schedule Inspection Address Inspection Issues Tell Insurance Agent Go Time Get Mortgage Appraisal Finalize Mortgage Closing Date Close on Home CELEBRATE!!!!! Take Possession Understand Mortgage Payment Page 7 6

8 Page 8 7 Mortgage Preapproval

9 Mortgage Preapproval Let's start from the very beginning. You might think going out and looking for houses is step one but the best place to start is making sure you qualify to buy a house at all! Maybe you've got the cash to purchase a house, but the majority of home buyers need to prove a lot more than the balance in their bank account. You're gonna need a financial partner, someone to invest in this house with you. Lenders that provide home loans are generally the best option. Getting preapproval from a mortgage lender means you have a preliminary idea of how much you can borrow and what the mortgage payment will cost each month. Preapproval doesn t mean your loan offer is 100% guaranteed. Lenders offer preapproval based on a limited amount of information. They ll dig a lot deeper after you ve found a house. Page 9 8 So let s get preapproved!. Know what you can borrow before looking for a house

10 Mortgage Preapproval Check Your Credit Report Understanding your credit position is key. Learning your 3 credit scores is step one. Here s how to do it: 1. Get your in-depth Credit REPORT here: 2. Get your 3 Credit SCORES here: 3. Note all three of your credit scores: EQUIFAX: EXPERIAN: TRANSUNION: 4. Figure your AVERAGE SCORE: (Do this by adding all three credit scores and dividing by 3) 5. RESULTS: An average above 740 gets you the best options available. Anything above 640 shouldn t create major problems. If it s 639 or below, see Page 10 about fixing your credit Page 109

11 Mortgage Preapproval Fixing Bad Credit If your credit is low, it s smart to address that first before applying for a mortgage. HERE S HOW: 1. Dispute Errors Look at the report from If there are errors, go through the process of disputing them. 2. Get Current with Your Monthly Payments Late payments are the #1 reason for low credit scores. Set up reminders or automatic withdrawal for all of your monthly bills. 3. Reduce Debt Where possible, pay off debt. Start with high interest credit cards. 4. Increase Income Easy to say, much harder to do. If it s possible, increasing your household income will affect your debt to income ratio helping both your credit and your eventual mortgage options. Page 1110

12 Mortgage Preapproval Page 1211 Pick a Mortgage Lender There are thousands of banks ready to loan money to the right borrowers. But you shouldn t apply to more than a couple because too many lenders hitting your credit can make it drop. Here s how to decide: Ask your friends & family Hopefully you ll get good advice from people you know, but they may not be drawing from a ton of experience Ask your realtor or your insurance agent These are pros who you already trust & they work with good & bad lenders all the time. Search online You ll find tons of options. Most look really smooth and easy on the front end, but they can be a huge pain to deal with. Beware, you may not end up with the deal you thought you had. Go to a local bank or mortgagee lender Going local offers a better experience and often results in better terms, which can save you thousands in the long run.

13 Important Mortgage Terms As you search for the right lender, here are some basic mortgage terms: Principal The amount you borrow Mortgage Preapproval Interest The extra money you pay the lender for letting you borrow the money Annual Percentage Rate (APR) A percent of the principal used to figure the interest Example: $100,000 Principle with a 3% APR = $3000/year you pay in interest Fixed Rate Mortgage The APR will stay the same for the entire mortgage. This is what you want. Adjustable Rate Mortgage The APR can change. Purchase Adjustable Rate Mortgages with caution. Mortgage Term Amount of years it will take you to pay the loan off if you only make the set monthly payment. 13 Page 12

14 Mortgage Preapproval Your Preapproved Mortgage Information: Lender Name: Principal Approved (how much have you requested to borrow) What is the term? Does the loan have a Fixed or Adjustable Interest Rate? If Fixed, what is the Annual Percentage Rate (APR)? If Adjustable, describe what the APR is, when it changes, & what it changes to? Page 1413

15 Page 1514 Hire A Realtor

16 Hire a Realtor A great Realtor will be your primary adviser throughout this process. Here s what they do: Show you homes Your Realtor will help guide you to the right possibilities, find options that may not be on the public market yet, manage the scheduling of showing, and generally organize the humans involved in the process. Help advise you about pitfalls you may miss Good Realtors advise you about the red flags at each property you consider. They can also help you think through issues and plan for the potential expenses associated with home improvements Mountain climbers need Sherpas. Home buyers need a Realtor. Suggest other businesses you ll need to hire You re Realtor will likely be your #1 referral base. S/he can suggest lenders, contractors, insurance agents and everyone in between. Most state regulations ensure that these businesses cannot profit for referring to each other, so you should receive advice free of monetary bias. Help you negotiate the deal Buyers and sellers don t generally talk with one another. Realtors act as mediators for home purchase negotiations. Page 1615

17 How to Choose Like choosing a mortgage lender, deciding on your Realtor is a crucial component of the experience. Here s what to do: Hire a Realtor Ask your network Post the question on Facebook Who helped you buy your home? the responses will make a great list full of excellent options. Ask your mortgage broker or your insurance agent These are people you already trust, and they work with Realtors all the time. Go to open houses Checking out houses is fun, and they re a great way to meet Realtors. You can ask questions about the house and get a feeling for the person. If you like them, take a card and call them a couple days later. Look online Zillow & Trulia are two of the big property information hubs. If you search properties in your town, suggestions for realtors will pop up. Some Realtors have professional pages on social media platforms like Facebook, Instagram, and Youtube. Page 1716

18 Realtor Interview Once you find a couple of Realtors who feel like a match, schedule a time to get together. Here are some great questions to add to your list: Hire a Realtor Do you prefer working with sellers or buyers? Most Realtors specialize. Knowing his/her preference may effect your decision. How would you describe the current real estate market in [your town]? Just like most marketplaces, the housing market has a supply & demand relationship. If supply is low, you ll have a harder time getting the right house for less than full asking price. If supply is high, you re likely to have multiple options and better bargaining power. How do you get paid? - In most cases, the seller pays for both the buyer and the seller s realtor. If that s not the case, it is likely a red flag. How will you find and get us into homes quickly? You want to know that your agent will get you in first. Asking this question up front establishes that expectation. Page 1817

19 Hire a Realtor Your Real Estate Agent Information: Name: Phone: Agency: Additional Information Page 1918

20 Page 2019 Find Your Home

21 Needs Assessment Our Basic Information Names: Employers: Price Range: Goal Move In Date: Page 2120

22 Needs Assessment Explain your needs for each topic. Give each line a 1-10 priority level (1 is lowest) Level Where the home is located: Town: Side of Town: School District: Level Environment: Rural: Urban: Suburban: Page 2221

23 Needs Assessment Explain your needs for each topic. Give each line a 1-10 priority level (1 is lowest) Level House: Bathrooms: Bedrooms: Yard: Kitchen: Garage: Accessibility: Other Spaces: Other Amenities: Page 2322

24 Needs Assessment Additional Notes: Page 2423

25 Home Option Tracker Level Keep track of homes you d like to visit: Give each home a 1-10 priority level (1 is lowest) Address: Price: Notes: Address: Price: Notes: Address: Price: Notes: Address: Price: Page 2524 Notes:

26 Home Option Tracker Level Keep track of homes you d like to visit: Give each home a 1-10 priority level (1 is lowest) Address: Price: Notes: Address: Price: Notes: Address: Price: Notes: Address: Price: Page 2625 Notes:

27 Home Option Tracker Keep track of the homes you ve walked through: Option #1: Address: Price: Square Footage: Lot Size: Things We Love: Draw Backs: Page 2726 Option #2: Address: Price: Square Footage: Lot Size: Things We Love: Draw Backs:

28 Home Option Tracker Keep track of the homes you ve walked through: Option #3: Address: Price: Square Footage: Lot Size: Things We Love: Draw Backs: Page 2827 Option #4: Address: Price: Square Footage: Lot Size: Things We Love: Draw Backs:

29 Pros & Cons Sheet Compare the Pros & Cons of your favorite houses: Address: PROS: CONS: Page 2928

30 Page 3029 Make An Offer

31 Make An Offer You ve found the house that you want to make your home. Here s how to proceed: Create the Offer to Purchase: The checklist on the next page will help you with this process. Your Realtor should play a major role as well.. Present to Seller: Generally, your Realtor will present your offer to the seller s Realtor. Counter Offers & Acceptance: This step can take multiple back and forth rounds. The seller can respond by: o Rejecting: They flatly say nope. o Countering: They adjust the terms and send the counter offer to you o Accepting: They say Yes, we have a deal Your ready to negotiate like a New York City hustler Sign the Purchase Agreement: The final step is both parties signing the agreement. Page 3130

32 Offer Checklist Purchase price Time frame for closing: days Who pays what closing costs Contingencies: Final loan approval Home passes inspection Home passes appraisal Sale of current home? Removal of all personal property Items you want the seller to leave Offer expiration date Seller must vacate by Earnest Money $ Final Steps: Verify financing is ready Verify state & local laws are followed Submit to Realtor Counter, accept, reject Sign purchase agreement Page 3231

33 Page 3332 Escrow Period

34 Escrow Period This is the period between an accepted offer and the closing (purchase completion). These tasks focus on fulfilling two things: Your Financing: You need to complete next steps from preapproval to funded. Being timely and thoroughly fulfilling the lender s requests will ensure your best outcome. Contingencies: Both you and the seller have likely asked for a list of things. Those now need to be completed. So many things to do and each one seems like the most important thing ever. Page 3433

35 Escrow Period Inspection: The inspection is a health examination for the home A certified inspector will spend a few hours scouring the house. S/he will create a detailed document addressing all aspects of the health of the home. Unless the home is new, there will be plenty of issues. All homes have issues. What you want to consider are the red flags. An old roof, active termites, structural issues, foundation issues, old wiring are examples of expensive repairs and potential deal breakers If there a significant red flags, you have two options: 1. Renegotiate Terms of Purchase: Ask the seller to fix the problem, or to cover your costs to repair. 2. Exercise your right to exit the purchase: Walk away from the deal and look for a better option. This is pretty much the only time you can renegotiate Page 3534

36 Escrow Period Insurance: Protecting your investment is vital, and your lender requires it Home insurance protects your investment by covering the cost if bad things happen. You ll need to get a home insurance quote early in the escrow period. Your mortgage lender will need it to calculate the closing costs. Page 3635 Most mortgage companies pay for your homeowner s insurance through an escrow account. You contribute to that account every time you make a monthly mortgage payment. Here are the basic steps to getting homeowner s insurance: Get a proposal from a trusted insurance advisor Provide the proposal to your lender Ask your insurance agent to put the policy into place for your closing date Connect your mortgage broker and insurance agent to work out further details.

37 Escrow Period Appraisal: The appraisal assesses the current market value of the home Although appraisals can be done for multiple reasons, the most common is for the lender to make sure that the home is worth at least what you re borrowing. Most banks won t loan you more than the home s appraised value. The process involves a professional appraiser analyzing the tax valuation, comparable home prices in the area, and even the purchase agreement that you have with the seller. When the assessment is complete, s/he will provide an appraised value of the home. This value must be more than the amount of your loan.. Page 3736

38 Finalize Your Mortgage: Escrow Period Here s where documents start flying Your mortgage is preapproved. Now the bank will want evidence of your financial status. They ll ask for a litany of things all to verify that you are in a position to fulfill your mortgage payments. Give them what they want when they want it A good mortgage lender will ask for as much information as possible all at once. Make sure to get that to them quickly. But don t be surprised if they want more. Every loan is different and even the best lenders don t know all the questions that will be asked of them. Be patient and be prompt. They re your lifeline to your loan. Compare the final mortgage proposal to the Good Faith Estimate and make sure the actual loan has the terms you agreed to.. Page 3837

39 Page 3938 Closing

40 Closing Everything is in place for the day of purchase. Here s what to consider: Where is the closing going to be held? How much money do you need to bring? What form does that money need to be in? (Cashier s Check?) Bring a photo ID There s nothing more sweet than completing a well fought battle. TAKE ALL THE TIME YOU NEED Your making a significant financial decision. Don t let anyone push the timing. Ask your questions and if solid answers aren t provided, ask them again. Minor things CAN change at the last minute and that s ok. But don t let anyone act like asking questions is a bother. Own the process and walk away clear about what happened. Page 4039.

41 Closing Checklist Verify insurance is in place Review Closing Disclosure with lender Verify seller contingencies are complete What to Bring Certified or cashier s check for closing costs Photo ID Any items requested by lender List of people to call if needed What You ll Sign REAL ESTATE TRANSFER Deed Bill of Sale Seller s Affidavit of Title MORTGAGE DOCUMENTS Closing Disclosure The Mortgage The Note Page 4140

42 Celebrate You did it!! Page 4241

43 Monthly Mortgage Payment Page 4342

44 Monthly Mortgage Payment One last tiny detail The closing s over and now it s time to repaint, move it and enjoy your new home. You ll probably get a couple months without any mortgage payment, but it s a good idea to mark you calendar and set up automatic payments now. Did you know you re actually paying three things in that one monthly payment? Here they are: 1. Principle: The first portion of your monthly payment goes towards paying back the money you borrowed. 2. Interest: This portion pays the bank for the right to borrow their money. It s a percentage (%) of the amount you still owe. 3. Escrow Account Contribution: Banks like to know that your property taxes and insurance are paid on time, so they collect money every month and then pay the tax and insurance bills when they come in.. Page 4443

45 Good Things Become Great When They re Shared If this guide was helpful, it s time to take these important steps: Share with your friends: Tell your story on our Facebook page: Subscribe on Youtube A wholehearted congratulations on the successful purchase of your new home. We wish you many magical years, lots of laughter & joy, and maybe a few tears. Be well & Shine on! Page 4544

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